3.31.2011

If the U.S. government was a corporation, Gross maintains, “then it would probably have a negative net worth of $35-$40 trillion.”

Without big cuts in entitlements, Gross paints a not-so-rosy picture. He writes:

“Unless entitlements are substantially reformed, I am confident that this country will default on its debt; not in conventional ways, but by picking the pocket of savers via a combination of less observable, yet historically verifiable policies – inflation, currency devaluation and low to negative real interest rates.”

Gross has essentially sold-off his Treasury holdings in the Total Return Fund.

He says that if sitting before Congress, he would say something like:

“I sit before you as a representative of a $1.2 trillion money manager, historically bond oriented, that has been selling Treasuries because they have little value within the context of a $75 trillion total debt burden.”